NO. 10 IN A SERIES OF OCCASIONAL PAPERS
[A
\
THE
SOCIAL-
INDUSTRIAL
COMPLEX
by Michael Harrington
The Social-Industrial Complex is excerpted from a chapter
which will appear in Michael Harrington's new book, To-
ward A Democratic Left, to be published by the Macmillan
Company in May, 1968.
The Author
Michael Harrington is the author of The Other America
and The Accidental Century. He is also Chairman of the
Board of the League for Industrial Democracy.
PUBLISHED BY THE
LEAGUE FOR INDUSTRIAL DEMOCRACY
112 E. 19 STREET • NEW YORK, N.Y. 10003
Cover design by Eugene Glaberman
THE
SOCIAL-
INDUSTRIAL
COMPLEX
by Michael Harrington
American business has long scrambled
over the common good in its haste to pursue
private profit. But now, the corporations
ernestly threaten a new, distinctive and
paradoxically dangerous course. Instead of
creating social problems, they are going to
solve them. In a strangely optimistic speech
at the University of Chicago last year, Lyle
M. Spencer, President of Science Research
Associates (an IBM subsidiary) , gave an
apt and ominous name to this new devel-
opment, the "social-industrial complex."
Spencer's enthusiasm is puzzling in that
his phrase is modeled on one of the most
somber statements Dwight Eisenhower
ever made: his warning against the sinister
potential of a "military-industrial com-
plex." And indeed, the phenomenon is
quite similar to the united front of execu-
tives and generals which so alarmed Presi-
dent Eisenhower. The military-industrial
complex bases itself on a permanent war
economy and a huge defense establishment.
This enormous vested interest in the means
of annihilation, Eisenhower feared, could
subvert the democratic process in vital
questions of war and peace. The social-
industrial complex also builds upon public
expenditure and a "partnership" between
government and business. But its rationale
is the Great Society, not the Cold War.
(Much of the massive spending waits, in
fact, upon the end of the tragic war in Viet-
nam.)
As Spencer puts it, "Social causes which
in the 'thirties were the domain of college
professors, labor unions and student demon-
strations are today becoming the new busi-
ness of business." What is menacing about
this sudden outburst of corporate con-
science is that satisfying social needs and
making money are two distinct, and often
antagonistic, undertakings.
Certainly the urgent demands on the na-
tion for housing, schools, jobs, clean air, and
plain civility must be met. But will the so-
cial needs really be met if the central role
in the solution is given to profit-seeking
enterprises? To answer this question, it is
well to begin with a slightly cynical analy-
sis of earthy motives of the corporatists
who want to throw the private sector into
the breach.
First of all, it is important to understand
that thought is becoming power to a degree
beyond the wildest imaginings of a Platon-
ist philosopher-king. Five years ago, Clark
Kerr estimated that the production, distri-
bution and consumption of knowledge al-
ready accounted for 29% of the Gross Na-
tional Product and was growing at twice
the rate of the rest of the economy. In 1966
the president of IBM declared that the na-
tion was fast approaching a time in which
more than half the work force would be in-
volved in processing and applying data.
Recently Harold B. Cores, the head of a
Ford Foundation subsidiary proclaimed,
"learning is the new growth industry." So
higher education is no longer the aristo-
cratic province of a tiny upper-class minor-
ity. And both practical politicians and hard-
headed businessmen have noticed this mo-
mentous trend.
Second, the executives of the social-in-
dustrial complex, and the American people
as a whole, have been tutored by militant
Negroes, without degrees in Business Ad-
ministration. In the Eisenhower 'fifties,
civic virtue was equated with a balanced
budget. But, beginning with Dr. Martin
Luther King's Montgomery bus boycott of
1955, a Negro mass movement rescued
America's better self. Eventually, the prac-
tical idealism of black men rekindled the
spirit of protest on the campus, challenged
the churches and the unions and, in effect,
prepared the country to respond to John
Kennedy's summons to action. In the proc-
ess, social conscience became a political
force. Americans suddenly noticed the ra-
cial ghettos, the black and white poor, the
polluted air and the squalid facilities of
the public sector.
But for all the talk about reform, little
was done. Three years after the proclama-
tion of the Great Society the Manpower
Report noted that the slums had become
worse, its people more desperate. In the
series of summer riots which began in 1964,
LIBRARY
UNIVERSITY OF TEXAB
AUSTIN, TEXAS
America was provided with another mo-
tive for change: fear. Some, to be sure, sim-
ply wanted to suppress the social problems
which gave rise to the violence by brute
force. If this view triumphs then the entire
society might stagnate for a generation or
more. But others were driven by the urban
upheavals to seek immediate and far rang-
ing solutions to the evils festering in the
central cities.
These trends created, as Herbert Hollo-
mon put it on behalf of the Department of
Commerce, a "public market." Hollomon
urged private industry to go out and build
colleges and create new cities. Max Ways
of Fortune called this approach "creative
federalism." It rested, he said, upon "the
rapproachment, during the Johnson Admin-
istration, between government and busi-
ness. The two still have and will always
have different responsibilities and aims. But
they are beginning to use the same working
language, depend on the same kind of peo-
ple, and get at tasks and decisions in the
same way."
Finally, credit must be given to Barry
Goldwater for convincing private enterprise
to ratify the massive federal presence which
the social-industrial complex requires. The
ideological unreality of Goldwater's presi-
dential campaign forced businessmen to
choose between the risks of the market and
the stability of a managed economy. The
captains of the greatest industries unhesi-
tatingly chose the latter course and in the
process endorsed Lyndon Johnson's Great
Society.
So the companies have acquired a con-
science at the precise moment when, for a
variety of technological, social and political
reasons, there is money to be made in doing
good. And in pursuit of their own private
purposes, the executives are going to have
much to say about what Americans think
and how they live. The knowledge industry
now includes, among others, General Dy-
namics, AT&T, General Electric, Time Inc.,
Minnesota Mining and Manufacturing,
Bell and Howell, Philco, Westinghouse,
Raytheon, Xerox, CBS, Burroughs Busi-
ness Machines and Packard Bell. The city
building industry has attracted Goodyear,
General Electric, Humble Oil, Westing-
house, U.S. Gypsum and even Walt Disney
Productions. And this, clearly, is only the
beginning of the beginning.
Charles Silberman of Fortune was not
being extravagant when he wrote recently
that the knowledge industrialists, in part-
nership with the government, are "likely to
transform both the organization and content
of education and, through it, of American
society itself." Clearly such a massive con-
centration of private power in a traditional
public domain is a disturbing fact. I asked
one of the top men in the field, Francis Kep-
pel, about it.
Keppel, the former United States Com-
missioner of Education, is now the head
of General Learning, a knowledge corpora
tion which has been put together by Gen-
eral Electric and Time Inc. His social con-
science long predates the business discovery
that thinking is a blue-chip occupation.
There is, Keppel concedes, a danger that
business will dominate, rather than serve,
American education. Yet, he argues, per-
haps the danger has been exaggerated. Of
the tens of billions of dollars which America
spends each year on schooling, the largest
single expenditure is for teachers' salaries.
After that, the money goes to construction
and maintenance and only about 4% of the
total, or less than $1.5 billion a year, is
devoted to instructional materials of all
kinds. Therefore, Keppel says, the giant
corporations have not really discovered
such a huge market and there really isn't
a fiscal motive for "taking over" the system.
Second, Keppel points out that decision
making in American education is decentral-
ized, authority is vested in a multiplicity
of boards, superintendants and principals.
The only way that the knowledge industry
can serve a truly public purpose, he be-
lieves, is by being clearly subordinate to
the educators. The latter must dictate the
content of what is to be taught. The corpo-
rations can then supply them with the serv-
ices and materials, but they must not im-
J JLiC ' -
pose a curriculum which is designed to sat-
isfy the needs of private profit rather than
those of students.
KeppePs second point, it seems to me,
involves a crucial distinction. For there are
two distinct antagonistic modes of business
participation in the solving of social prob-
lems which often employ an identical rhet-
oric. On the one hand, the society can dem-
ocratically decide on what it wants to teach
and the kinds of cities it wants to live in.
It can then contract out the preparation of
materials, the construction work, and even
certain advisory functions to the private
sector. This would keep planning and pro-
gramming clearly under democratic politi-
cal, rather than corporate, control, and
make non-profit organizations the pivot of
the whole system. This is what Keppel ad-
vocates. On the other hand — here is the
sinister potential of the social-industrial
complex — America might unwittingly hire
business to build a new urban civilization
on the basis of the very money-making pri-
orities which brought the old civilization
to crisis. The contractor would not simply
execute the contract. He would draw it up
as well,
Keppel admits that this second, and
ominous, possibility exists. He also con-
cedes that the relative smallness of the
educational market is cause for pessimism
rather than optimism. It could mean that
companies will design machines and pro-
grams according to corporate specification
for private use and then, as a careless,
moneymaking afterthought, unload them on
school systems as well. Keppel himself is
clearly determined to fight this tendency.
And there have been published reports of
an internal struggle within General Learn-
ing between the technicians and engineers,
concerned with knowledge "hardware," and
the educators. Yet there is disturbing evi-
dence of powerful elements in the industry
much less idealistic than Keppel. If they
prevail, the intellectual formation of the
American young could be subordinated to
the pursuit of profit. Enthusiastically, even
euphorically, the Wall Street Journal has
reported that Keppel's worst fears are al-
ready becoming fact.
"It is clear," the Journal said in one anal-
ysis, "both government and industry will
play increasingly active parts in deciding
what schools will teach and how they will
present it." A little later, the paper was
more precise: "... new schools to a consid-
erable extent have to be built around the
electronic gear that will cram them."
There are already signs that this is hap-
pening. "A lot of schools have been taken
advantage of by industry," according to
Dr. Frank Brown, Superintendent of
Schools in Melbourne, Florida. "There are
millions of dollars worth of equipment
stored in schools that just isn't practical."
And the United States Commissioner of
Education, Harold Howe II, generalized
the point: "Like the drug for which there
is yet no disease, we now have some ma-
chines that can talk but have nothing to
say. I would caution the businessman not
to venture into hardware unless he is pre-
pared to go all the way into printed mate-
rials and programming."
If, as Howe rightly fears, the technical
comes to predominate over the intellectual
in American schools, then fundamental de-
cisions about learning will become a func-
tion of the corporate struggle for shares of
the knowledge market. If this happens,
then each producer will push its own par-
ticular technology: Xerox its kind of teach-
ing machines; IBM computer-run class-
rooms; CBS, television; and so on. Obvi-
ously machines, computers and television
may have an enormous contribution to
make to American education. But how is
one going to decide among them? If the
Wall Street Journal estimate is correct,
there will be a considerable amount of com-
pany jockeying before the basically educa-
tional decision is made. At this point, those
familiar with the military-industrial com-
plex will be aware of a striking similarity
between it and the emerging social-indus-
trial complex.
Each element in the defense sector (some-
times in alliance) — particular industries,
branches of the service, "independent" as-
sociations for the Army, Air Corps, Navy
and Marines, and even trade unions — has
its own special interest ( profit for the com-
panies, prestige and power for the officers,
jobs for labor). And each one lobbies for
strategies which are determined, not by any
objective analysis of the needs of the nation,
but by their own stake in the decision. The
debate over the B-70 bomber during the
Kennedy Administration was a classic case
in point. A powerful section of the military-
industrial complex, led by the Air Force,
mounted a determined campaign against
the Administration in favor of proposals
which had been rejected by three Secre-
taries of Defense under Eisenhower and by
Secretary McNamara under Kennedy.
Something like this pattern is beginning
to emerge within the social-industrial com-
plex. "Business," to quote the Wall Street
Journal once more, "is turning into an im-
portant force for pushing embattled domes
tic proposals through Congress." An exec-
utive of the Department of Housing and
Urban Development is quoted as saying,
"Each agency has gradually developed a
list of firms interested in its field ... we
don't keep them turned on all the time, but
we know how to turn them on. . . ."At first
glance this might seem to portend a happy
situation in which the corporations are lend-
ing their political power to a public purpose.
But, as the experience of the military-indus-
trial complex demonstrates, such proce-
dures lead straight to private alliances be-
tween self-interested executives and ambi-
tious bureaucrats. This trend is already quite
developed in the cities industry — where,
for instance, real estate men support rent
subsidies as a means of attacking public
housing — and, as the Wall Street Journal
realizes, it is going to appear in educa-
tion too.
A report in the June, 1967, New Republic
vividly illustrates what this might mean.
The Office of Education, it said, was con-
sidering a grant of $2 million to build a com-
puter classroom for Menominee indians in
Wisconsin. Westinghouse Electric was to
develop the hardware which would even-
tually serve 60 students. This considerable
investment would do nothing to help 900
other children on the reservation who are
currently receiving inferior education from
uncertified teachers, and it is proposed at
a time when mechanized teaching is being
criticized by some educators as being too
impersonal. If the New Republic is right,
the decision makers had focused not on the
needs of these Indian children but on con-
siderations of governmental-corporate real-
politik. "The one substantive reason for fin-
ancing this project," the article held, "is
the government's interest in building up
the education industry; in this instance,
picking up Westinghouse's developmental
costs so it can compete with other com-
panies, like IBM, which the United States
also finances." So these young Indians
might be among the very first students in
the land to have their education designed
according to the engineering principles of
the B-70 bomber.
During the 1967 New York State Con-
stitutional Convention, there was another
illustration of how business might put its
aims first and education second. The elected
representatives of the people were discus-
sing adopting the principle of universal
free college education for the citizens of
the state. It was not a coincidence that at
that precise moment all of the major insti-
tutional investers in New York suddenly
decided not to bid on $46.6 million in state
school construction notes. It was widely
rumored that they were fearful that the pro-
posed constitutional provision would make
such an investment too risky and this was
a rather blunt hint that the members of
the Convention should back off from any
radical educational commitments to the
people. Anthony Travia, the President of
the Convention, in a not so veiled refer-
ence to the influence of Governor Rock-
efeller in the Chase Manhattan Bank, re-
marked, "Someone has a friend in some
bank and it certainly isn't Travia."
As Keppel emphasized, the ultimate out-
come of many of such alarming trends are
in doubt. There have been, to be sure,
minor scandals like the hawking of pro-
grammed instruction door-to-door during
the teaching machine vogue of a few years
back. And Parsons College has shown what
an aggressive administrator can do when
he runs an educational institution like a
business. But the giants in the field have
been working cautiously with the long run
in mind. So far they have been most active
in vocational training, both private and
public, and the case of the Job Corps may
offer some hints of things to come.
When the Corps was first set up under
the Economic Opportunity Act, it was
widely hailed as a trail-blazing example of
uniting Federal idealism and free enter-
prise expertise. Contracts were awarded to
corporations like Federal Electric (a sub-
sidiary of IT&T) , the ubiquitous Litton In-
dustries, U.S. Industries, and Westinghouse
Air Brake. In general, the early high hopes
have been disappointed. For, as Sar Levitan
summed up the experience in 1967 the costs
have been high (the contracts are, in ef-
fect, on a cost-plus basis), and the com-
panies themselves have lost some of their
enthusiasm, partly because the escalation
of the tragic war in Vietnam makes them
feel they can look toward McNamara rather
than Shriver for government contracts. The
most relevant perspectives on the Job Corps
experience are provided by the members
and organizers of the American Federation
of Teachers, one of the fastest growing
unions in the country. The AFT has con-
sistently fought to improve the quality of
education as well as the wages and working
conditions of its members. Its somewhat dis^
illusioned view of the privately operated
Job Corps camps does not really have to
do with money. Rather it centers on the
feeling that the companies treated the edu-
cators in their employ like so many hired
hands, that they treated schools as if they
were factories.
John O'Leary is a personable young AFL-
CIO organizer who worked with the AFT in
their 1966 and 1967 attempt to sign up the
Camp Kilmer Job Corps. Kilmer was oper-
ated by the Federal Electric Corporation
and its contract established a relationship
with Rutgers University, which was sup-
posed to evaluate the project. The first
Rutgers report was a controversial criticism
of the Camp, charging "flagrant deficien-
cies." After much debate, the University
decided that its professors were delivering
their own opinions and nothing more.
Originally, as O'Leary tells the story
of the organizing campaign, 80 academic
teachers at Kilmer wanted to form a bar-
gaining unit, and they came to the AFT.
The management, according to O'Leary,
reacted with union busting tactics. Labor
relations experts were imported, group
meetings were sponsored, everyone on the
payroll received letters. The company, in
a classic anti-union maneuver, insisted that
the bargaining unit should be expanded to
include vocational teachers and fought the
issue up through the labor relations struc-
ture. By the time Federal Electric had car-
ried its point at the regional level of the
NLRB, the original union membership had
either become demoralized or left the Camp.
At Excelsior Springs, Missouri, Westing-
house Air Brake fought a similar delaying
action after AFT members went out on
strike. Ten months after the original ac-
tion, the union majority had eroded, the
election was lost, and management pro-
ceeded to fire five of the union leaders
(the AFT submitted unfair labor practices
charges on this count). At the Parks Job
Corps Center in California, managed by
Litton Industries, a 20 day strike led to
an election in June of 1967. In the course
of that campaign, one of the complaints of
the Teachers and Counselors Union at
Parks was that "Litton bought hundreds
of thousands of dollars of Litton teaching
materials of questionable value in the class-
room from its own educational subsidiary
with your tax dollars and forced instructors
to use them."
As a result of these experiences, John
Schmid, the State Federation's Coordinator
of the AFT, concluded that "it is plain that
private industry feels that teachers deserve
6
even less of a voice in the formulation of
curriculum than do most boards of educa-
tion/' This judgement has many implica-
tions but one of them is especially relevant
here. As the idealistic, education-oriented
activists of the AFT see the Job Corps ex-
perience, the private companies have tended
to impose factory style labor relations on a
school system. In this case KeppeFs fears
have been justified: business is here taking
a commanding, autocratic position, not a
subordinate one.
Indeed, David Gottlieb, a top analyst in
the Office of Economic Opportunity's Plans
and Programs Division, generalized this
point in terms of OEO experience. The
corporate-run Job Corps camps had, he
said, a "garment of approval," for the con-
servatives in Congress are always ready to
attack the inadequacies of a Federal project
run by Harvard, Columbia or Berkeley but
they are not apt to question the undertak-
ings of a good, down to earth businessman.
Therefore, Gottlieb asserted, the corporate
undertakings are freer from governmental
supervision than, say, a Peace Corps train-
ing institute directed by a University. And
since social program administrators are al-
ways looking for industry support, they are
less able to bring these operations under
public control.
Gottlieb does not think that the com-
panies have abused their freedom. Yet the
fact that private entrepreneurs in the new
knowledge industry already have an im-
munity from democratic criticism denied
non-profit professors indicates, I believe, a
dangerous trend in the field of education.
In his Farewell Address, President Eisen-
hower expressed alarm that the military-
industrial complex would come to control
American education. He was concerned
about "the prospect of domination of the
nation's scholars by Federal employment"
and the possibility that "public policy could
itself become the captive of a scientific,
technological elite." In part, Eisenhower's
fears have been justified. Clark Kerr testi-
fied to this — perhaps too candidly from
the point of view of his own career — in
The Uses of the Multiversity. He said that
Federal grants and big business needs
are playing an ever increasing role in de-
termining the shape and quality of higher
education in America. But now, with the
social-industrial complex the danger be-
comes more pervasive for it extends to the
kindergarten and Job Corps camp as well
as to the graduate seminar. There are those,
like Keppel, who would make the knowl-
edge industry the servant of the educators.
But there seem to be many more who follow
the jubilant philosophy expressed in the
Wall Street Journal articles: that schools
shall now be designed to fit machines rather
than the other way around.
But the social-industrial complex is not
simply concerned with how Americans
think. It may also attempt to decide how
the nation lives.
During the hearings chaired by Senator
Ribicoff in 1966, the country got some idea
of the enormous dimensions of the urban
crisis. It is necessary, in President John-
son's phrase, to build a "second America"
- between 1966 and 2000, the United States
must construct more new housing units than
it now possesses. The official estimates call
for 2 million additional units a year, with
at least 500,000 of them designed for low-
income families. The AFL-CIO says we
need 2.5 million new units a year; other
estimates go as high as 3 million. And these
things can only be done, businessmen like
David Rockefeller told Ribicoff, if there is
a Federal subsidy to attract the social con-
science of profit-makers. So a huge, new,
tax-supported market may well be in the
making.
This is at least one reason why the
backers of the Demonstration Cities (now
Model Cities) Act in the fall of 1966 in-
cluded Rockefeller, Henry Ford, Thomas
Gates of Morgan Guaranty Trust, Alfred
Perlman of New York Central, and R. Gwin
Follis of Standard Oil of California. It also
helps explain why General Electric is now
interested in building a city of 200,000
people from the ground up — using GE
products where possible, of course — and
why U.S. Gypsum is demonstrating its
skills in publicly-supported slum rehabilita-
tion and hopes to make an eventual 8 to 10
percent profit from such work. What was
considered "socialism" only yesterday is
turning into a sound business investment.
There is a modest precedent for this pat-
tern in the activities of the "civic" ex-
ecutives who appeared in many major
American cities in the 'fifties and 'sixties.
These men were primarily bankers, depart-
ment store owners, office-building landlords
and others with a strong business stake
in the central city. They mobilized entire
communities, used both Federal and local
funds, and improved the downtown areas
to meet the needs of banks, department
stores and office buildings rather than those
of the black and white poor. In 1967, the
New York Times reported that Mr. Lewis
Kitchen, President of the City Reconstruc-
tion Company, was preparing to spend half
a billion Wall Street and insurance com-
pany dollars in repeating this profitable
error. He proposed to attract the upper
and middle classes to the city by creating
"an entire neighborhood screened from the
blighted areas by wide parks and land-
scaping. . . ."
But the real danger today is not that the
social-industrialists in the city industry will
repeat the mistakes of the past (though
some of them will). Nor, with a few ex-
ceptions, is the trouble that they are greedy
profiteers engaged in some kind of conspir-
acy against the common good. The issue
goes deeper than that. For when business
methods are sincerely and honestly applied
to urban problems, with every good inten-
tion, they still inevitably lead to antisocial
results. In this area, as in education, only
the primacy of the democratic political
authority over economic values and inter-
ests will make possible the creation of new
communities.
There are, of course, some fairly vulgar
instances of groups simply placing their
goals over and above those of the people.
When the National Association of Real
Estate Boards, a group not noted for its
social conscience and with much to answer
for in the area of civil rights, comes out
in favor of rent subsidies in order to kill
public housing, there is need for compli-
cated analysis. The major banks and busi-
nesses in Pittsburgh which have also ap-
proved the rent subsidy approach must be
aware that they will eventually capture a
good portion of the Federal grant. And the
number of utility company presidents, de-
partment store owners and bankers who
have backed the Model Cities program are,
like the civic executives of recent times,
determined that any urban renaissance
be shaped in accord with their particular
needs.
It is exactly when such crass concerns
are not paramount that the real problem —
the inapplicability of business methods
and priorities to the crisis of the cities —
emerges most clearly. The testimony of
David Rockefeller of Chase Manhattan be-
fore the Ribicoff sub-committee is an ex-
cellent case in point.
Rockefeller is an enlightened, and liberal,
banker. Urban problems, he quite rightly
told the Senators, "are so closely inter-
related they call for the establishment
of over-all goals and guidance. Housing,
schools, transport and pollution are all part
of the same organic system. Public agen-
cies, in most cases, must set the over-all
goals, then provide assistance and in-
centives to private enterprise to carry out
as much of the program as possible." In
order to accomplish this, it is necessary to
"take steps to make investment in urban
redevelopment more appealing in compari-
son with other opportunities ..." i.e., for
tax subsidies to lure social-industrialists
into a slum rehabilitation market which, in
and of itself, is not attractive to money
seekers. Senator Charles Percy's original
home ownership plan was most blunt on
this point and candid about real motives.
His program, he said, "would be attractive
to lenders because it promises a compe-
titive yield and no risk in addition to its
social and philanthropic appeal." [empha-
sis added]
8
In theory, the Rockefeller approach sub-
ordinates the businessman to the "over-all
goals" of the community which are deter-
mined by democratic process. But, in my
view, and this is the crucial point, with all
the good will in the world, Mr. Rockefeller
proposes in practice to interpret those goals
according to an economic calculus which
can have only antisocial consequences. And
since he is talking in terms of five business
dollars invested to every Federal dollar
(Ribicoff hopes for a ratio of $7 to $1) , the
fact that he will allocate resources and
order his design on the basis of tried, true
and disastrous priorities is of some moment.
"Economic logic," Mr. Rockefeller says,
"dictates that the use of real estate be in
some meaningful relationship to its value.
The projects we have mapped for lower
Manhattan are massive, and generally of
commercial, taxpaying nature' 9 [emphasis
added] Because this is exactly the approach
which contributed much to creating our cur-
rent problems, it is difficult to see how it will
solve them. As the 1966 Council of Eco-
nomic Advisors Report analyzed the strain
which the commuters are placing upon city
transportation systems: "Compounding this
problem has been the increase in urban land
values which encourages taller buildings
with dense occupancy."
In the 'fifties and 'sixties, the Rockefeller
conception of land use prevailed dramati-
cally in Manhattan. The builders made
quite sure that real estate had a meaningful
relation to its "value" as narrowly and
commercially defined. Huge office buildings
were constructed in the center of the city
without any regard for other possible loca-
tions (Harlem, Bedford-Stuyvesant) or to
alternate use of the resources for abolishing
ghettos. An intolerable load thus was placed
upon already crowded and grimy transit
facilities. And there was, of course, a total
lack of concern for history, beauty and
civility.
A task force told Mayor Lindsay in 1966,
"Few stores, theatres or hotels can com-
pete with the arithmetic of office buildings.
Those sites which have become legendary,
surrounded by character and convenience,
often are just the ones the office builders
want." If this situation continues, the task
force said, buildings which give New York
much of its distinctive style, like the Plaza
Hotel, are doomed. The "massive," "com-
mercial" and "taxpayer" structures which
will go up in their place can be easily
imagined. And if stores, theatres and even
the Plaza Hotel cannot compete with office
buildings, it is naive to think that the poor
of the central city will be able to do so.
Less than a year after Mr. Rockefeller
testified before the Ribicoff Committee
there was an excellent illustration of what
his words really meant. Eighteen Con-
gressmen asked Governor Rockefeller and
Controller Arthur Levitt not to put state
offices in the World Trade Center but to
locate them in Harlem, the South Bronx
and Bedford-Stuyvesant instead. As the
New York Times reported the story,
Levitt's refusal to accept this suggestion
was on David Rockefeller's grounds: "Mr.
Levitt, whose approval is required on con-
tracts exceeding $1,000, said that his final
decision would be based on economic fac-
tors, not on purported sociological advan-
tages of locating in poor neighborhoods."
But taking such "sociological advan-
tages" into account is precisely what is
desperately needed if America is to emerge
from its present crisis. It was both scan-
dalous and utterly logical for the FHA to
wait until just after the violent outbursts
in Detroit to decide to give mortgage in-
surance to blighted and "economically un-
sound" neighborhoods. The insurance com-
panies which pledged $1 billion in ghetto
rehabilitation waited, of course, until the
FHA got around to thus insuring their in-
vestment. Their funds were to be directed
toward rent subsidy housing, which would
mean further government support and rents
beyond the reach of the most poor. And
finally, even if the entire billion was de-
voted to creating new dwelling units (which
is doubtful), the effort would create only
80,000 new units, or less than 20% of the
annual need as defined by the government
9
itself. In short, the society cannot really
look to business for the massive instruments
which it needs. Even under the best of
Federally subsidized and insured circum-
stances, the catastrophes of the other Amer-
ica do not yield commercial rates of interest.
What the cities need are "uneconomic"
allocations of resources. Money must be
"wasted" on such uncommercial values as
racial and class integration, beauty and
privacy. And this is not simply a mat-
ter of some gigantic master plan for it con-
cerns individual trees in front of individual
houses as well. "Neighborhoods," the New
York Chapter of the American Institute of
Architects has said, "must be planned to
create environments which offer more than
mere spartan utility, which have character
and provide pleasure for those who live
there." Businessmen, even at their most
idealistic, are not prepared to act in the
systematically unbusinesslike way which
such amenities require. Take, for example,
the "turnkey" program announced for pub-
lic housing in August, 1967 (the word comes
from the construction industry, not the
prison system, although its use in the
area of public housing is, to put it mildly,
stupid). Under this experiment, private
companies are going to contract, not simply
to build, but to manage public housing
projects.
In discussing this idea, Joseph Califano
of the White House staff was quoted as
saying that "once a contract has been
made under the turnkey process for a fixed
amount, developers were free to make what-
ever profit they could within the framework
of the contract." Under such circumstances,
any honest and intelligent businessman
would opt for the cheapest standards ac-
ceptable within the terms of the contract
and that could have profoundly antisocial
consequences. For it was precisely such
a Congressional insistence on minimum
amenities in public housing which, as
Charles Abrams has documented, led to
the (economical) practice of building seg-
regated, high-rise monsters.
But perhaps the most striking illustration
of what commercial values do to social and
aesthetic considerations is provided by the
fate of the new town of Reston, Virginia.
This project was initiated by Robert E.
Simon and it originally envisioned archi-
tectural innovation and even a certain
amount of social-class integration. These
goals could not be accommodated on a
businesslike basis and Simon was even-
tually forced to turn his dream over to
the biggest investor, the Gulf Oil Corpora-
tion. Gulf's man, Robert H. Ryan, was
quite blunt about the changes he intended
to make: "Economic feasibility must be a
part of good planning and design," he said.
And therefore in building a new town "you
have to listen to the market."
What Ryan heard on the market was to
abandon even the ultimate aim of any kind
of integration and to make the architec-
ture much more conventional.
So businessmen are understandably
loathe to make anti-profitable and pro-social
decisions on their own initiative. It does not
pay. But even if they were willing to do
so, they really do not have the right. The
uneconomic values of community are, or
should be, in the public domain and must
be subject to democratic determination. In
this area, even more than in education, the
social-industrialists must be subordinated
to popular planning institutions.
Some people, of course, think we can get
around this problem by uttering the magic
word "rehabilitation." A great many of
the social-industrial complex proposals on
housing — ranging from HEW's Urban De-
velopment Corporation to Senator Percy's
home ownership plan — pretend that the
current problem will be solved if existing
slums are refurbished. In this way, one is
absolved from exercising any imagination
in creating the second America. All that is
necessary is to spruce up the first America.
The only difficulty with this solution is that
it will not work.
There are, to be sure, neighborhoods in
big cities which could be rehabilitated and
thus preserve variety and sometimes even
beauty (Georgetown in Washington, D.C.
10
is an ex-slum) , But in almost every case
this involves removing about three quarters
of the present residents. In an area like
Harlem, for instance, the trouble is not just
that people pay exorbitant rents for de-
lapidated quarters, but also that three, four
and five humans have been crammed into
spaces adequate to the needs of a single
individual.
Rehabilitation will only work if it is part of
a program to build millions of new housing
units for the poor and the deprived (Sena-
tor Ribicoff estimates that, in reality, it
takes a family income of about $8,000 a
year to qualify for current Federal sub-
sidies for housing — which omits the ma-
jority of the American people) . And second,
if the nation is going to pay more than lip
service to its goal of integration, then even
the most prettied up, but racially segre-
gated, ghetto will not do. Finally, both the
problems of density and integration obvi-
ously require massive planning at the Fed-
eral, regional and local level if they are to
be solved.
It is from this perspective that I would
criticize Senator Robert F. Kennedy's anti-
slum program. Kennedy has been one of
the most compassionate and conscientious
of men with regard to the ghettos. He un-
derstands that decent housing is utterly
central to both the war on poverty and the
struggle for civil rights. Yet his $1.5 billion
of tax incentives to lure investers into the
slums would produce only 400,000 units in
seven years according to the New York
Times. That is 100,000 fewer units that the
yearly rate of low-cost housing advocated
by the 1966 White House Conference on
Civil Rights. Indeed, none of the various
proposals to get business into the low-cost
housing field which were being circulated
during 1967 was designed to help the poor.
In Kennedy's scheme, as in the suggestions
of Senators Percy, Clark, and Mondale, the
units are intended to rent to families with
incomes between $4,000 and $6,000. Now it
is certainly true that this group has been
effectively excluded from the post- War fed-
eral subsidies and has a right to govern-
mental help. But it is a matter of some
moment that these programs offer nothing
to the poor (the poverty "line" in 1967 was
set at $3,200 for an urban family of four)
and therefore would not even touch the ma-
jority of Negroes in the United States.
Moreover, the Kennedy approach could
result in subdividing the design of a neigh-
borhood into a myriad of 100-unit parcels.
The Senator proposes that the Federal
Government insist on minimum standards,
but surely they are no substitute for the
creative planning of a new urban environ-
ment.
And neither is the philosophy expressed
by John Notter of the American-Hawaian
Land Company, an enterprise spun off by
the American Hawaian Steamship line,
which creates New Towns. "The secret,"
Notter told Fortune, "is getting other peo-
ple to spend their money instead of you
spending yours. Most of our office space is
devoted to bookkeepers. In New Town de-
velopments that's the real name of the
game!" And Fortune added admiringly, "As
American-Hawaian and Humble [Humble
Oil] are proving, that's one game large cor-
porations can understand." What kind of
new urban civilization will such a game
produce?
In short, even the most good-hearted
social-industrialism will aggravate, rather
than resolve, the urban crisis. It is precisely
the de facto planning authority which has
been conferred upon commercial values
that has brought us to our present plight.
Business cannot play the dominant role in
the attempt to rescue the cities from the
mess which business methods and priorities
have created. And it is impossible to get
around this embarrassing fact by talking
about rehabilitation. There is simply no
substitute for a creative exercise of the
social imagination and massive public in-
vestment.
At this point it is possible to synthesize
various aspects of the social-industrial com-
plex and to identify a new, and dangerous,
American philosophy. It is the ideology of
anti-ideology.
11
The notion that Western society is com-
ing to an "end of ideology" was first arti-
culated by academics, almost all of them
liberals, some of them socialists. As Daniel
Bell developed the idea, the advanced
economies had achieved such material af-
fluence and political consensus that "the
old politico-economic radicalism (preoc-
cupied with such matters as the socializa-
tion of industry) has lost its meaning , . ."
The result was a "post-industrial" society
in which the "new men are the scientists,
the mathematicians, the economists and the
engineers of the new computer technology."
This theory was adapted to corporate
purposes by business philosophers like Max
Ways. For the proclamation of the end of
ideology provided an excellent rationale
for the social-industrial complex. (Bell and
his colleagues had not, of course, in-
tended this use of their thesis). If the
public market were still a 'thirties-like
battleground where antagonistic classes
and groups fought for dominance, then
business, as a minority special interest,
could hardly be trusted with the social fate
of the majority. But if, as Ways argued,
"U.S. politics is making a major turn from
the politics of issues to the politics of prob-
lems," then all is changed. The old, ideo-
logical debate over "issues" in which the
radicals proposed to take from the rich and
give to the poor is no more. Problem-solving
is the order of the day. And the corpora-
tion, as a neutral association of qualified
experts, will, for a reasonable fee, promote
the public good in an absolutely impartial
and scientific way.
The evidence assembled here indicates
that Ways and the other philosophers of
the social-industrial complex are wrong. In
producing a knowledge technology, running
Job Corps camps, improving downtown
areas, proposing priorities for revitalizing
entire cities, or suggesting panaceas of slum
rehabilitation, the social-industrialists are,
at every point, pursuing private interest
and ideology.
What is at stake is nothing less than
how the Americans of the twenty-first
century are going to think and live. The
tragedy of this new and profitable business
conscience with which they may have to
deal is already foreshadowed in the actual
history of one of the first industries to adopt
the pretense of unselfishness and anti-
ideology: television.
In the mid-'thirties, William Paley of
CBS appeared before the Federal Commu-
nications Commission. He was a sort of
premature social-industrialist. His com-
pany, he said, was not primarily a "busi-
ness organization, except to the extent that
economics are a necessary means to social
ends. Surely any stress on economics as an
end in themselves would betray a lack of
understanding of the role which broadcast-
ing plays in every plane of American life."
A generation later, after broadcasting
had become totally commercialized, New-
ton Minow described the "wasteland"
which had resulted. The Kennedy Admin-
istration then exhorted the broadcasters to
live up to their social responsibility. In
March, 1965, after four years of this con-
centration upon ethics, the FCC reported
that public service hours had decreased by
15 percent.
Walter Lippmann summed up the impli-
cations of this particular experience and his
words apply to the social -industrial com-
plex as a whole. "The regulatory method,"
he wrote, "runs counter to the facts of life.
It supposes that broadcasters can function
permanently as schizophrenics, one part of
the brain intent on profits and another of
that same brain based on public service and
the arts."
In the debate over public television, the
Ford Foundation corroborated Lippmann's
point. It had proposed a non-profit corpora-
tion which would utilize the revenues from
domestic communications satelite service to
finance an uncommercial network. The big
companies in the field were, of course, op-
posed. But then the Ford Foundation ar-
gued that in the case of Comsat, a public-
private corporation, the private interest had
a disturbing habit of prevailing (six of the
15 members of the board are nominated by
12
LIBRARY
UNIVERSITY OF TEXAS
AUSTIN. TEXAS
the commercial carriers, and the majority
of the rest of the directors comes from busi-
ness). Comsat, the Foundation said, had
delayed orbiting facilities in the sky be-
cause such progress might jeopardize ex-
isting, and highly profitable, relay functions
on the ground.
The Foundation made a succinct state-
ment of why it opposed a private corpora-
tion in this particular part of the public
domain. It told the Federal Communica-
tions Commission that such an enterprise
"would be bound by law to serve the inter-
ests of its stockholders — which may not be
that of the nation at large." The moral of
this story is not confined to television.
The knowledge and the cities industries
— and the entire social-industrial complex—
suffer from this very same schizophrenia,
and they are quite capable of making waste-
lands of the schools and cities. Like CBS
in the 'thirties, their ceremonial rhetoric
disdains the "stress of economics" even
while their daily practice is based upon a
self-interest. America, whether it likes it or
not, cannot sell its social conscience to the
highest corporate bidder. It must build new
institutions of democratic planning which
can make the uneconomic, commercially
wasteful and humane decisions about edu-
cation and urban living which this society
so desperately needs.
T 1 ^i^M^j
13
HTHE
TWHIT1EIH
MICHAEL HARRINGTON
t«^ju# ter WwM Xxmcuimy / 50e
ALSO FROM THE LID
Michael Harrington brilliantly probes
the question: can the United
States pursue a democratic foreign
policy or does its politico-economic
structure dictate a conservative
course in world affairs? 50c
The Urban School Crisis . 750
Essays by Paul Goodman, Christopher Jencks, Nathan Glazer and others.
Which Way Out? 250
by Bayard Rustin
The Pathos of "Black Power" 250
by Paul Feldman
To Build A New World: A Brief History of American Labor 350
by Thomas R. Brooks
Quantity Rates: "The Social-Industrial Complex
1 or more — 350 per copy
10 or more-300 per copy
100 or more- 200 per copy
500 or more— 150 per copy
#f
For publications or additional information about the LID write
League for Industrial Democracy
112 E. 19 Street/ New York, N.Y. 10003
(212) AL 4-5865